State House passes Madigan pension-reform plan

Published: Friday, May 3, 2013 5:30 a.m. CDT

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SPRINGFIELD – DeKalb-area lawmakers split on a plan approved Thursday that would tackle the $97 billion shortfall in the state's retirement system by increasing employee contributions and decreasing benefits, the first victory for across-the-board pension reform in four years of debate.

Shepherded by House Speaker Michael Madigan, the House voted, 62-51, in favor of a plan he says would reduce pension liability by $30 billion and fully fund the systems by 2044 for state employees, university workers, and school teachers.

"This obviously does not meet every request. This obviously does not make everyone happy," Madigan, a Chicago Democrat, said during more than an hour of floor debate. "We're all familiar with the severe fiscal problem of the state and the fiscal problems of the pension systems are a large part of that problem."

Rep. Robert Pritchard, R-Hinckley voted against Senate Bill 1 because not all of the interested parties signed off on this proposal. He said it would set up a challenge in the courts.

"We aree going in the right direction, but all of that is going to be for naught if it's tied up in court if we don't address some of these issues," Pritchard said.

Rep. Tom Demmer, R-Dixon, voted yes, adding that he felt the courts would find their efforts to be constitutional.

"When we are faced with a real situation of having a limited number of dollars ... we have to make choices," Demmer said. "No one entity can remain untouched in a time of significant budget pressures."

The plan largely resembles a blueprint negotiated by Democratic Rep. Elaine Nekritz and House Republican Leader Tom Cross. But Madigan put some zing into the debate by introducing his language, pushing it through a committee vote over labor leaders' objections and ushering it off the House floor, all in about 48 hours.

Years of underfunding by past governors and General Assemblies led to a pileup of debt in five public-employee pension accounts, which now are nearly $100 billion short of what they need to cover all current and retired workers.

At its base, the plan requires employees to pay 2 percent more of their salaries toward pensions and reins in cost-of-living increases, tying it not to the pension they earn each year, but to a cap $1,000 for each year of service. Pensions may be paid on a total salary of $110,000, a limit that increases by half the rate of inflation each year and retirement is delayed for people aged 45 or younger.

No one argued it was an easy vote, but it was historic, Nekritz said, both in terms of its breadth and its message.

"We are putting necessity ahead of political expediency and doing the right thing over the easy thing," the Northbrook Democrat said.

While agreeing to some of the provisions, Pritchard was opposed to not having judges be a part of the reform effort. A number of pension reform bills have left out judicial pensions out of fear that judges would rule the law unconstitutional.

Pritchard, who represents Northern Illinois University in the House, said the pension cap on salaries of $110,000 will be a burden to universities trying to attract new talent.

Employee unions' main complaint about "reform" has been that pension contributions have continued to come out of individual worker paychecks without fail.

"If I'm a state worker, if I'm a teacher, a university worker, I have every right to be mad as hell. I've done everything you've asked me to, dutifully ... with every expectation that what I was promised when I started was going to be there ... ," Cross said. "We have no choice. We have to move forward today."

The state will owe about $6 billion for pensions next year, but no one plans to build in any savings even if the bill becomes law because they expect a lawsuit over the plan's constitutionality.

The bill now returns to the Senate, which will have to agree with the House's changes before it heads to Gov. Pat Quinn's desk. Senate President John Cullerton has repeatedly insisted that any pension reform plan be constitutional. His original S.B. 1 offered state employees a choice between cost-of-living increase or subsidized health care.